1.  س Copyright 2000 Prentice Hall 3-1 Chapter 5 Analyzing the Marketing Environment

2.  س Copyright 2000 Prentice Hall 3-2 The objectives Of this Chapter is to The objectives Of this Chapter is to Describe the environmental forces that affect the company’s ability to serve its customers. Explain how changes in the demographic and economic environments affect marketing decisions. Identify the major trends in the firm’s natural and technological environments. Explain the key changes in the political and cultural environments. Discuss how companies can react to the marketing environment.

3.  س Copyright 2000 Prentice Hall 3-3 The substantial speedup of international transportation, communication, and financial transactions, leading to the rapid growth of world trade and investment, especially tripolar trade (North America, Western Europe, Far East) The movement of manufacturing capacity and skills to lower cost countries. The rising economic power of several Asian countries in world markets. The rise of trade blocks such as the European Union and NAFTA signatories. Identifying and Responding to the Major Macroenvironment Forces

4.  س Copyright 2000 Prentice Hall 3-4 The severe debt problems of a number of countries, along with the increasing fragility of the international financial system. The increasing use of barter and countertrade to support international transactions. The move toward market economies in formerly socialist countries along with rapid privatization of publicly owned companies. The rapid dissemination of global lifestyles. The gradual opening of major new markets, namely China, India, eastern Europe, the Arab countries, and Latin America. Identifying and Responding to the Major Macroenvironment Forces

5.  س Copyright 2000 Prentice Hall 3-5 The increasing tendency of multinationals to transcend their locational and national characteristics and become transnational firms. The increasing number of cross-border corporate strategic alliances–for example, MCI and British Telecom, and Texas Instruments and Hitachi. The increasing ethnic and religious conflicts in certain countries and regions. The growth of global brands in autos, food, clothing, electronics. Identifying and Responding to the Major Macroenvironment Forces

6.  س Copyright 2000 Prentice Hall 3-6 Objectives Tracking Trends & Identifying Opportunities in the Marketing Environments: –Macroenvironment -- BIG Picture –Microenvironment -- Closer-In –Internal environment -- you & me

7.  س Copyright 2000 Prentice Hall 3-7 THE MARKETING ENVIRONMENT INTRODUCTION INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT SWOT ANALYSIS THE MARKETING ENVIRONMENT INTRODUCTION INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT SWOT ANALYSIS THE MARKETING ENVIRONMENT INTRODUCTION INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT SWOT ANALYSIS THE MARKETING ENVIRONMENT INTRODUCTION INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT SWOT ANALYSIS

8.  س Copyright 2000 Prentice Hall 3-8

9.  س Copyright 2000 Prentice Hall 3-9 Marketing Environment Marketing:Marketing: We have discussed before the meaning of Marketing and we said that marketing isWe have discussed before the meaning of Marketing and we said that marketing is. Environment:Environment: What do we mean by the environment?What do we mean by the environment?

10.  س Copyright 2000 Prentice Hall 3-10 Marketing Environment Marketing EnvironmentMarketing Environment- consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. Includes: –Microenvironment –Microenvironment - forces close to the company that affect its ability to serve its customers. –Macroenvironment –Macroenvironment - larger societal forces that affect the whole microenvironment.

11.  س Copyright 2000 Prentice Hall 3-11 … you’ve got to peel away a few layers to get to the good stuff! But, the Business World is like an Orange...

12.  س Copyright 2000 Prentice Hall 3-12 Peeling the “Orange” Target Consumers Product PlacePrice Promotion Purchasing R&D Production M arketin g Competitors Intermediaries Publics Suppliers Demographic Economic Technological Natural Political Legal Social Cultural Engineering Logistics Finance Accounting © Bruce C. Bailey 1998

13.  س Copyright 2000 Prentice Hall 3-13 The Marketing Environment Company Demographic Economic Natural Technological Political Cultural Company Customers Intermediaries Suppliers Competitors Publics

14.  س Copyright 2000 Prentice Hall 3-14 The Microenvironment Company Customers Publics Suppliers Competitors Intermediaries Forces Affecting a Company’s Ability to Serve Its Customers Forces Affecting a Company’s Ability to Serve Its Customers

15.  س Copyright 2000 Prentice Hall 3-15 The Company’s Microenvironment Company’s Internal EnvironmentCompany’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc. SuppliersSuppliers - provide the resources needed to produce goods and services and are an important link in the “value delivery system”. Marketing IntermediariesMarketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers.

16.  س Copyright 2000 Prentice Hall 3-16 The Company’s Microenvironment CustomersCustomers - five types of markets that purchase a company’s goods and services. CompetitorsCompetitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage. PublicsPublics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.

17.  س Copyright 2000 Prentice Hall 3-17 Types of Customer Markets Company Consumer Markets International Markets Government Markets Business Markets Reseller Markets

18.  س Copyright 2000 Prentice Hall 3-18 Types of Publics Financial i.e. Banks Media i.e. Newspapers Government i.e. Regulations Citizen-Action i.e. Consumer Groups Local i.e. Neighborhood Residents General Public Internal i.e. Employees

19.  س Copyright 2000 Prentice Hall 3-19 The Macroenvironment Demographic Technological Cultural Economic Political Natural Forces that Shape Opportunities and Pose Threats to a Company Forces that Shape Opportunities and Pose Threats to a Company

20.  س Copyright 2000 Prentice Hall 3-20 The Company’s Macroenvironment DemographicDemographic - studies populations in terms of age, gender, race, occupation, location and other statistics. EconomicEconomic - factors that affect consumer purchasing power and spending patterns. NaturaNatural - natural resources needed as inputs by marketers or that are affected by marketing activities.

21.  س Copyright 2000 Prentice Hall 3-21 Key U.S. Demographic Trends Changing Age Structure Population is getting older Changing Age Structure Population is getting older Changing Family Structure Marrying later, fewer children, working women, and nonfamily households Changing Family Structure Marrying later, fewer children, working women, and nonfamily households Geographic Shifts Moving to the Sunbelt and suburbs (MSA’s) Geographic Shifts Moving to the Sunbelt and suburbs (MSA’s) Increased Education Increased college attendance and white-collar workers Increased Education Increased college attendance and white-collar workers Growing Ethnic and Racial Diversity 72% Caucasian, 13% African-American, 11% Hispanic & 3% Asian Growing Ethnic and Racial Diversity 72% Caucasian, 13% African-American, 11% Hispanic & 3% Asian

22.  س Copyright 2000 Prentice Hall 3-22 Worldwide Population Growth Population Age Mix Ethnic Markets Household Patterns Educational Groups Geographical Shifts in Population Shift from Mass to Micromarkets Demographic Environment

23.  س Copyright 2000 Prentice Hall 3-23 Economic Environment Changing Consumer Spending Patterns Changing Consumer Spending Patterns Economic Development Economic Development Changes in Income Changes in Income Key Economic Concerns for Marketers Key Economic Concerns for Marketers Inflation and Recession Inflation and Recession

24.  س Copyright 2000 Prentice Hall 3-24 Income Distribution Subsistence economies Raw-material-exporting economies Industrializing economies Industrial economies Savings, Debt, & Credit Availability Savings, Debt, & Credit Availability Economic Environment

25.  س Copyright 2000 Prentice Hall 3-25 Inflation Prices rise with no wage increase Purchasing Power decreases Increase profit margins by increasing efficiency Consumers reaction: – Search for lowest prices – Rely on coupons and sales

26.  س Copyright 2000 Prentice Hall 3-26 Recession Income, production and employment fall Reduced demand for goods and services

27.  س Copyright 2000 Prentice Hall 3-27 Recession Marketing Strategies  Improve existing products  Maintain customer services  Introduce new products  Emphasize top-of -the line products

28.  س Copyright 2000 Prentice Hall 3-28 Natural Environment Shortages of Raw Materials Shortages of Raw Materials Increased Pollution Governmental Intervention Governmental Intervention Factors Affecting the Natural Environment Factors Affecting the Natural Environment

29.  س Copyright 2000 Prentice Hall 3-29 The Company’s Macroenvironment TechnologicalTechnological - forces that create new technologies, creating new product and market opportunities. PoliticalPolitical - laws, agencies and groups that influence and limit organizations and individuals in a given society. CulturalCultural - institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.

30.  س Copyright 2000 Prentice Hall 3-30 Technological Environment Rapid Pace of Change Rapid Pace of Change Unlimited Opportunities Unlimited Opportunities Increased Regulation Increased Regulation Practical, Affordable Products Practical, Affordable Products Issues in the Technological Environment Issues in the Technological Environment

31.  س Copyright 2000 Prentice Hall 3-31 Technological & Resource Factors New technology helps firm cope with other environmental factors New technology helps firm carrying out and easuapply of research Information technology helps economic growth

32.  س Copyright 2000 Prentice Hall 3-32 Political Environment Increasing Legislation Designed to Protect Groups Increasing Legislation Designed to Protect Groups Changing Government Agency Enforcement Changing Government Agency Enforcement Increasing Emphasis on Ethics and Socially Responsible Actions Increasing Emphasis on Ethics and Socially Responsible Actions Some Trends in the Political Environment Include:

33.  س Copyright 2000 Prentice Hall 3-33 Political-Legal Environment Regional Groupings –European Union (EU) –NAFTA Consumerism & SIG’s –MADD/SADD Ethics & Social Responsibility Increased Legislation & Enforcement

34.  س Copyright 2000 Prentice Hall 3-34 Cultural Environment Of Organizations Of Organizations Of Nature Of Nature Of Oneself Of Oneself Of Society Of Society Of the Universe Of the Universe Of Others Of Others Cultural Values of a Society Cultural Values of a Society

35.  س Copyright 2000 Prentice Hall 3-35 Responding to the Marketing Environment Environmental Management PerspectiveEnvironmental Management Perspective –Taking a proactive approach to managing the microenvironment and the macroenvironment by taking aggressive (rather than passive) actions to affect the publics and forces in the marketing environment. –How? Hire lobbyists, run “advertorials”, file law suits and complaints, and form agreements.

36.  س Copyright 2000 Prentice Hall 3-36 Rest Stop: Reviewing the Concepts Describe the environmental forces that affect the company’s ability to serve its customers. Explain how changes in the demographic and economic environments affect marketing decisions. Identify the major trends in the firm’s natural and technological environments. Explain the key changes in the political and cultural environments. Discuss how companies can react to the marketing environment.